I have an old, headless PIII box that is managed remotely via vnc. It runs x11vnc and X uses the dummy driver. After upgrading the driver from version 0.3.4 to version 0.3.5, X was unable to start.
This seems relevant: http://bugs.debian.org/cgi-bin/bugreport.cgi?bug=660574
Can you check whether xf86-video-dummy-0.3.5-r1 works?
No problems with xf86-video-dummy-0.3.5-r1 so far, everything seems in order, thanks!